FFP Fraud prevention workshop

It has been a very busy summer for us here at the Airline Information SeaMountain blog. We’ve rcently held our Payments and Fraud Summits in Miami for the Latin America market and in Kuala Lumpur for Asia Pacific.

Besides great content and networking, a key piece of feedback has been the growth of FFP Fraud. The “new” accounting rules for Customer Loyalty Programs means that miles have to be properly accounted for. The upshot is that airlines are now offering many wierd and wonderful ways (at least according to Jay Sorensen in his research report – read that here) to burn off the miles.

The other people to have taken notice are our “friends” in the fraudseter world. They’ve seen that miles = cash. And are actively targetting FFP accounts. In response to that we’ve added a Fraud Prevention session to the Airline and Travel Payment Summit.

For more details on the Summit and this session (places are limited) then click here to go to the Airline Information events website.

Airline and Travel Payment Summit – London 23/24th October

The Freddies are back!

2012 sees the return of the Freddie awards and alongside the event Airline Information is running FFP Spring. With speakers from the likes of Etihad, the new PeoplExpress and the guru of FFP programs himself, Randy Petersen, this event is not to be missed.

Scan, board, buy and fly with Duty Free QR codes

SeaMountain is delighted to have a guest blogger today, Ivor Smith from Duty Free on Arrival.com with an update of what is happening in the highly competitive world of duty free:

Airline passengers will soon be able print their boarding pass, scan, check-in, board and also buy duty free goods, when QR codes start appearing on their custom delivered boarding passes.

QR scanning apps are now widely available for mobile devices as they facilitate the ease of transfer from the printed word to a web page which can provide comprehensive product information. They are a huge success in the Far East, especially Japan and South Korea and now leading retailers, like Tesco in the UK, are using them to enhance promotional offers.

Simply, consumers see the QR code on a poster, news or journal page and scan the code to gain more knowledge directly on the web.

Securidox believe that the inclusion of a QR code on their securely delivered airline boarding passes will not only enable the passengers’ smooth transit through their airport, but also it will take them immediately to the airline’s onboard sales portal.

When asked about the test, Mark Scott MD of Securidox said, “ID is essential, but a boarding pass is the one piece of paper that every passenger must have to travel. We can add web page specific QR codes to each of our boarding passes, so that the mobile traveller can then scan for pre-flight offers. We are exploring and developing this idea with Ivor Smith of dutyfreeonarrival.com who has secured QR codes and duty free web page data for every world airline.”

Ivor Smith Founder of dutyfreeonarrival.com said “we have a multi-lingual webpage for every airline in the world and we receive hundreds of search strings every day asking for links to in-flight duty free catalogues. The consumer wants to buy and he wants to buy through technology, but he is having difficulty finding his way to the store. This is why he asks us. With the Securidox initiative, he can now print, scan and buy through a simple link affiliation mechanism.”

Mark Scott added, “The hidden benefit of these codes is that (not only) can they be targeted to a specific offer, but also detailed analytics can be collected from each user. Longer term, the facility could be linked to a passenger’s Loyalty account. But the real benefit is that the passenger starts thinking and searching how to ‘buy-on-board’, before he arrives at the airport.”

The current Airline share of the world duty free market is only 7%, so the parties to this test believe that an initiative which will take the passenger direct to the airline shop before he flies, can help to increase sales.

EzRez launch e-wallet

You might be wondering where the link is between Mileage Plus becoming a new global currency and EzRez launching an e-wallet. But read a bit further and you’ll find out the real significance in this story.

For those of you that are not following the e-wallet story, it is, essentially, a way to have “money” online for electronic virtual payments. So, instead of the wallet being in your pocket or purse, it is online, and you can use that “money” to pay merchants in the virtual world. Which cuts down on keying in 16 digit numbers along with all your vital statistics.

The idea being that increased convenience leads to lower merchant costs and greater sales. Google, amongst many others, has launched an e-wallet, so you might be thinking that EzRez is just playing catch up with their launch.

What’s in your e-wallet?

The answer to this question is the genius and significance behind EzRez’s move. Their currency is frequent flyer miles. Their first partner is Mileage Plus and here is the second bit of EzRez’s foresight – how you can spend Mileage Plus Miles. You will, using the EzRez e-wallet be able to spend Mileage Plus Miles at any merchant that takes PayPal.

Suddenly the whole of the internet becomes the reward catalogue if you are earning Mileage Plus Miles. On top of that Miles become a very interchangeable currency. At Airline Information’s recent Airline and Travel Payment Summit in Toronto, some of the delegates from co-brand cards thought it was odd that there was a “payments” track running alongside their event. As this announcement shows, miles are a currency and you need payment methods to be able to spend them!

To read the EzRez press releases please click on the relevant links below:

Remember Latitudes?

If you are here in the UK and of a certain age you must just remember AirMiles Latitudes. It was the original FFP currency that BA launched in the UK way back in the dim and distant past. BA wasn’t overly keen on having a “traditional” FFP scheme and it showed in many ways with Latitudes. That scheme then merged/evolved in to the Executive Club which is still here in the 21st Century.

What was interesting in the early days of the Executive Club was that in the UK only you earnt AirMiles as the FFP currency. And the scheme worked on the AirMiles model – you earned miles based on a table of zones (eg London to Glasgow which is about 400 miles would get you 50 Air Miles) but redeemed on distance. So, London to Paris would cost (the minimum) of 500 Air Miles.)

That, as you can imagine for FFP members in the UK caused endless confusion. By definition these Frequent Flyers would be in different parts of the world and they would see promotions offering, say, 2,000 miles free. Now those were different miles. Not Air Miles. The upshot of that was that BA introduced a single currency – BA Miles – way back at the turn of this century.

Air Miles members now to earn miles for flying

Earlier today, Avios (the new name for Air Miles as well as BA and IB’s currency) sent a communication to Air Miles collectors answering some FAQ’s. One of them was “Can I collect on flights” to which the answer is yes. Avios members (who have been collecting Air Miles) can now earn miles for flying.

This is a game changer – previously you had to be a member of the Executive Club to earn miles from flying. Now, Avios members can earn for flying as well. That has some very interesting knock-on effects. Clearly, BA hopes that will encourage lots more flying with them and not their competitors such as EasyJet and Ryanair. It also means that they can encourage that flying without having to sign people into a FFP scheme that has tiered benefits. Most occasional flyers can never hope to obtain these benefits – such as free lounge access – with a few flights a year and having them in that scheme was always a mixed message. Now, with being able to offer Avios points for flying, they have found a neat solution to this challenge.

As the French say, plus ca chance…….it might have taken 20 years, but in many ways, back to the future!

Remember Latitude?

If you are here in the UK and of a certain age you must just remember Latitude. It was the original FFP scheme that BA launched way back in the dim and distant past. BA wasn’t overly keen on having a FFP scheme and it showed in many ways with Latitude. That scheme then evolved in to the Executive Club which is still here in the 21st Century.

What was interesting in the early days of the Executive Club was that in the UK only you earnt AirMiles as the FFP currency. And the scheme worked on the AirMiles model – you earned miles based on a table of zones (eg London to Glasgow which is about 400 miles would get you 50 AirMiles) but redeemed on distance. So, London to Paris would cost (the minimum) of 500 AirMiles) which is the opposite way for most FFP schemes where you earn miles based on distance flown and redeem against a zoned table of destinations.

That, as you can imagine for FFP members in the UK caused endless confusion. By definition these Frequent Flyers would be in different parts of the world and they would see promotions offering, say, 2,000 “miles” free. Now those were different miles. Not Air Miles. The upshot of that was that BA introduced a worldwide single currency – BA Miles – way back at the turn of this century. And stopped offering Air Miles for flying.

AirMiles members now to earn miles for flying

Earlier today, Avios (the new name for Air Miles as well as BA and IB’s currency) sent a communication to AirMiles collectors answering some FAQ’s. One of them was “Can I collect on flights” to which the answer is yes. Avios members (who have been collecting Air Miles) can now earn miles for flying.

This is a game changer – previously you had to be a member of the Executive Club to earn miles from flying. And those miles weren’t AirMiles. Now, Avios members can earn for flying as well. That has some very interesting knock-on effects. Clearly, BA hopes that will encourage lots more flying with them and not their competitors such as EasyJet and Ryanair. It also means that they can encourage that flying without having to sign people into a FFP scheme that has tiered/elite benefits. Most occasional flyers can never hope to obtain these benefits – such as free lounge access – with a few flights a year and having them in that scheme was always a mixed message. Now, with being able to offer Avios points for flying, they have found a neat solution to this challenge.

As the French say, plus ca chance…….it might have taken 20 years, but in many ways, back to the future!

An update of Frequent Flyer Fraud

Many of you might know that fraud for airlines (and many online retailers) is a big issue. In fact, according to the survey done by Airline Information in conjunction with Cybersource, it costs at least US$1.4 billion. Which, in an industry with such slim margins is money that can’t afford to be lost.

So, FFP fraud might not seem such a big issue. One of the recent SeaMountain blogs talked about how accounts had been hacked and goods point with points. Now another source of FFP has come to our attention.

Many airlines have started to sell their miles direct to members. Driven, partly by the functionality offered by the likes of Points.com, airlines have seen this as a good way of driving sales. There are numerous offers in the market from the major players with bonus miles on offer for members to top up their accounts.

However, it seems that the fraudsters have spotted a loop-hole (amazing how they always seem to find them!) in some airlines systems. In airlines without a joined up approach to their payments and fraud strategy it appears that the normal fraud checks weren’t being applied on the directly bought miles. This only became apparent when the chargebacks came in and the miles had gone out to members accounts and been redeemed.

This is yet another reason why it makes sense for the airline people who sell miles (and the majority of them are for co-brand cards) to be at the Airline and Travel Payment Summit where they can speak with the payment and fraud managers from airlines. They can help them devise strategies to make sure the income from mileage sales ends up in the bank and not as chargebacks!

New capital injection of 153 million euros

Always nice to have some good news to report – especially with the world economy in such a difficult state. AirBaltic has announced that it is to receive 153 million euros in new capital.

It would appear that the action taken by the company has brought the matter to a successful conclusion and we can look forward to lots more new innovations from them. From their AirBaltic Taxis and bikes in Riga to balticmiles the capital will help them expand and grow pax numbers and deliver further innovations!